Although the result of the US presidential election may cast uncertainty over the cycle of interest rate movement, financial analysts in Hong Kong are still confident that current interest rate cuts will support Hong Kong economy and the property market.

The Hong Kong Monetary Authority (HKMA) reduced the base rate to 5 percent on Friday, according to the established mechanism with immediate effect, after the US Federal Reserve announced a 25-basis point cut of the federal funds rate to 4.5 percent to 4.75 percent on Thursday, the second interest-rate cut since September.

The HKMA said banks in Hong Kong will take into account factors such as funding supply and demand in the interbank market such as seasonal effects and capital market activities, the level of interbank rates and their own funding cost structures to determine deposit and lending rates.

The Hongkong and Shanghai Banking Corporation and Hang Seng Bank on Friday announced that they will cut their Hong Kong dollar lending rates and Hong Kong dollar savings deposits rates by 25 basis points on Nov 11. Bank of China (Hong Kong) also said it will slash its Hong Kong dollar prime rate and Hong Kong dollar savings deposit rate by both 25 basis points on Nov 11.

Other major banks in the city, including Standard Chartered Bank (Hong Kong), Bank of East Asia and ICBC (Asia) also slashed their lending and deposit rates.

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The HKMA maintained that the US rate-cut decision will not affect Hong Kong’s financial and monetary stability. “Our financial and monetary markets have continued to operate in a smooth and orderly manner with stable market liquidity conditions and a steady Hong Kong dollar exchange rate,” the HKMA said in its statement on Friday.

But the city’s banking industry regulator cautioned that the pace of future rate cuts remains uncertain. “It is subject to US economic data, which will be influenced by fiscal, economic and trade policies, and monetary policies across the major economies are not entirely in sync. The HKMA will closely monitor market developments including interest rate trends and fund movements around global markets to ensure financial and monetary stability.”

The financial markets previously forecast that the US will enter a gradual interest-rate cut cycle, but as Donald Trump won the US presidential election, the interest-rate movement cycle will be more challenging and uncertain.

“Trump’s proposed expansionary fiscal policy of tax cuts and tariff levies may spur inflation. It may also increase market concerns about the US federal government’s debt burden and even affect the Fed’s prospect of cutting interest rates,” Dah Shing Bank said in a research report.

Financial analysts anticipated that the gradual decrease in US interest rates, albeit more uncertain, could still support Hong Kong economy and the property market.

“We expect the US Fed to cut interest rates by another 25 basis points next month and gradually relax monetary policy next year, depending on US data and economic trends. The gradual fall in US interest rates will help Hong Kong’s economy maintain steady growth and we continue to predict that Hong Kong's economy will grow 2.8 percent this year,” said Thomas Shik, head of economic research and chief economist at Hang Seng Bank.

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Eric Tso, chief vice-president of mReferral, said that as the actual mortgage loan interest rate will be reduced, property owners can further save on interest expenses and immediately relieve the financial pressure of making mortgage loan repayments. “The fall in interest rates, in conjunction with the government’s relaxation of many mortgage measures, has had a positive impact on the mortgage market, and it is expected that other banks will follow suit.”